It is difficult to turn on a TV or radio or pick up a newspaper these days, without finding some pundit or other deploring the dismal prospects for Israeli-Palestinian peace or the dreadful living conditions of the Palestinians. Even supposedly neutral news reporters regularly repeat this sad tale. "Very little is changing for the Palestinian people on the ground," I heard BBC World Service Cairo correspondent Christian Fraser tell listeners three times in a 45 minute period the other evening.

In fact nothing could be further from the truth. I had spent that day in the West Bank's largest city, Nablus. The city is bursting with energy, life and signs of prosperity, in a way I have not previously seen in many years of covering the region.

As I sat in the plush office of Ahmad Aweidah, the suave British-educated banker who heads the Palestinian Securities Exchange, he told me that the Nablus stock market was the second best-performing in the world so far in 2009, after Shanghai. (Aweidah's office looks directly across from the palatial residence of Palestinian billionaire Munib al-Masri, the wealthiest man in the West Bank.)

Later I met Bashir al-Shakah, director of Nablus's gleaming new cinema, where four of the latest Hollywood hits were playing that day. Most movies were sold out, he noted, proudly adding that the venue had already hosted a film festival since it opened in June.

MORE MERCEDES THAN IN TEL AVIV

Wandering around downtown Nablus the shops and restaurants I saw were full. There were plenty of expensive cars on the streets. Indeed I counted considerably more BMWs and Mercedes than I've seen, for example, in downtown Jerusalem or Tel Aviv.

And perhaps most importantly of all, we had driven from Jerusalem to Nablus without going through any Israeli checkpoints. The government of Benjamin Netanyahu has removed them all since the Israeli security services (with the encouragement and support of President George W. Bush) were allowed, over recent years, to crush the intifada, restore security to the West Bank and set up the conditions for the economic boom that is now occurring. (There was one border post on the return leg of the journey, on the outskirts of Jerusalem, but the young female guard just waved me and the two Palestinians I was traveling with, through.)

The shops and restaurants were also full when I visited Hebron recently, and I was surprised to see villas comparable in size to those on the Cote d'Azur or Bel Air had sprung up on the hills around the city. Life is even better in Ramallah, where it is difficult to get a table in a good restaurant. New apartment buildings, banks, brokerage firms, luxury car dealerships and health clubs are to be seen. In Qalqilya, another West Bank city that was previously a hotbed of terrorists and bomb-makers, the first ever strawberry crop is being harvested in time to cash in on the lucrative Christmas markets in Europe. Local Palestinian farmers have been trained by Israeli agriculture experts and Israel supplied them with irrigation equipment and pesticides.

A NEW PLANNED CITY

A new Palestinian city, Ruwabi, is to be built soon north of Ramallah. Two weeks ago, the Jewish National Fund, an Israeli charity, helped plant 3,000 tree seedlings for a forested area the Palestinian planners say they would like to develop on the edge of the new city. Israeli experts are also helping the Palestinians plan public parks and other civic amenities.

Outsiders are beginning to take note of the turnaround too. The official PLO Wafa news agency reported last week that the 3rd quarter of 2009 witnessed near record tourism in the Palestinian Authority, with 135,939 overnight hotel stays in 89 hotels that are now open. Almost half the guests come from the U.S or Europe.

Palestinian economic growth so far this year – in a year dominated by economic crisis elsewhere – has been an impressive 7 percent according to the IMF, though Palestinian Prime Minister Salam Fayad, himself a former World Bank and IMF employee, says it is in fact 11 percent, partly helped along by strong economic performances in neighboring Israel.

NO, NOT A CONCENTRATION CAMP

In Gaza too, the shops and markets are crammed with food and goods – see for example, these photos from last Friday's Palestine Today newspaper about the Eid celebrations in Gaza. These are not the pictures you are ever likely to see on the BBC or Le Monde or The New York Times. No, Gaza is not like a "concentration camp," nor is the "humanitarian crisis in Gaza is on the scale of Darfur," as British journalist Lauren Booth (who is also Tony Blair's sister-in-law) has said.

In June, The Washington Post's Jackson Diehl related how Palestinian President Mahmoud Abbas had told him why he had turned down Ehud Olmert's offer last year to create a Palestinian state on 97 percent of the West Bank (with three percent of pre-1967 Israeli land being added to make up the shortfall). "In the West Bank we have a good reality," Abbas told Diehl. "The people are living a normal life," he added with a candor he rarely employs when addressing Western journalists

Nablus stock exchange head Ahmad Aweidah went further in explaining to me why there is no rush to declare statehood, saying ordinary Palestinians need the IDF to help protect them from Hamas, as their own security forces aren't ready to do so by themselves yet.

BORDER DISPUTES ALL OVER THE WORLD

The truth is that an independent Palestine is now quietly being built, with Israeli assistance. So long as the Obama administration and European politicians don't clumsily meddle as they have in the past and make unrealistic demands for the process to be completed more quickly than it can be, I am confident the outcome will be a positive one. (The last time an American president – Bill Clinton in 2000 – tried to hurry things along unrealistically, it merely resulted in blowing up in everybody's faces – literally – and set back hopes for peace by some years.)

Israelis and Palestinians may never agree on borders that will satisfy everyone. But that doesn't mean they won't live in peace. Not all Germans and French agree who should control Alsace Lorraine. Poles and Russians, Slovenes and Croats, Britons and Irish, and peoples all over the world, have border disputes. But that doesn't keep them from coexisting with one another. Nor – so long as partisan journalists and human rights groups don't mislead Western politicians into making bad decisions – will it prevent Israelis and Palestinians from doing so.

(Tom Gross is the former Jerusalem correspondent of the Sunday Telegraph.)